Mumbai, NFAPost: The board of directors of Tata Motors Ltd (TML) has approved the proposal of demerger of TML into two separate listed companies housing the commercial vehicles business and its related investments in one entity and the passenger vehicles businesses including EV, JLR and its related investments in another entity.
The demerger will be implemented through an NCLT scheme of arrangement and all shareholders of TML will continue to have the identical shareholding in both the listed entities.
Over the past few years, the commercial vehicles (CV), passenger vehicles (PV plus EV), and Jaguar Land Rover (JLR) businesses of Tata Motors have delivered a strong performance by successfully implementing distinct strategies.
Since 2021, these businesses have been operating independently under their respective CEOs. The demerger is a logical progression of the subsidiarisation of PV and EV businesses done earlier in 2022 and will further empower the respective businesses to pursue their respective strategies to deliver higher growths with greater agility while reinforcing accountability.
Furthermore, while there are limited synergies between CV and PV businesses, there are considerable synergies to be harnessed across PV, EV and JLR particularly in the areas of EVs, autonomous vehicles, and vehicle software which the demerger will help secure.
Tota Sons Chairman N Chandrasekaran said Tata Motors has scripted a strong turnaround in the last few years.
“The three automotive business units are now operating independently and delivering consistent performance. This demerger will help them better capitalise on the opportunities provided by the market by enhancing their focus and agility. This will lead to a superior experience for our customers, better growth prospects for our employees and, enhanced value for our shareholders,” said Tota Sons Chairman N Chandrasekaran.
The NCLT scheme of arrangement for the demerger will be placed before the TML board of directors for approval in the coming months and will be subject to all necessary shareholder, creditor and regulatory approvals which could take another 12-15 months to complete. The demerger will have no adverse impact on employees, customers, and the business partners of the company.
